Frozen loans to be thawed

Many local firms have complained about the lack of access to capital

The central bank’s Circular 19/2010/TT-NHNN was issued a week before its predecessor Circular 13 took effect with amendments mostly on loosening deposit calculation methods.

Accordingly, banks’ credit from deposits must be no more than 80 per cent of total deposit. Besides, banks are entitled to use equity for lending, which was not allowed under Circular 13.

Circular 19 also extends the definition of total deposit when calculating the loans-to-deposit ratio to include 25 per cent of non-credit institutions’ current deposits, and domestic and foreign credit institutions’ deposits with terms of more than three months.

Banks are also allowed to use current State Treasury deposits as deposits, which is expected to expand state-owned commercials banks’ deposit volumes. 

The new regulations will help many banks improve deposit values to provide credit as a large number of banks have experienced slow deposit growth rates.

A State Bank report read that institutions’ non-term deposits accounted for 19 per cent of total banks’ deposit. State banks’ State Treasury deposits were VND57 trillion ($3 billion) including VND33 trillion ($1.7 billion) at Agribank, VND9.4 trillion ($494.7 million) at BIDV, VND8.3 trillion ($436.8 million) at Vietcombank and VND1.4 trillion ($73.6 million) at Vietinbank.

“The central bank conducted a survey of the local banking system and found  possible non-term deposit withdrawals may be 80 per cent, meaning that VND80 out of total VND100 deposited could be withdrawn at any time. Thus, we have to have a closer look at the 25 per cent rate of current deposits at banks,” said Nguyen Van Giau, central bank governor.

Vietcombank general director Nguyen Phuoc Thanh said difficulties in boosting credit operations remained for banks this year. “This is in the context that capital demands from enterprises remained low in comparison with the same time last year. On the other hand, banks will also be more cautious in lending to satisfy regulated safe ratios,” Thanh said.

Vietcombank maintains its target to have a credit growth rate of 20-25 per cent for the full year. In the year ending August, Vietcombank posted a credit growth rate of 15 per cent.

An ACB executive said even the room for credit had been further opened to banks, it was only two months from now before the year ended.

“Proper credit growth by the end of September allows us to have a positive vision on the full-year target of 25 per cent,” governor Giau said.

Credit growth in the year ending September was reportedly 19.5 per cent. Of which, credit for property was around VND218 trillion ($11.4 billion), an increase of 17 per cent against the beginning of this year. Credit for securities was VND15 trillion ($789.4 million), a rise of 20 per cent. Credit for consumption was around VND151 trillion ($7.9 billion), a rise of 20 per cent. The total credit for these non-production sectors was around VND385 trillion ($20.2 billion), a rise of 18.2 per cent against the beginning of this year.

The growth rate of credit for small- and medium-sized enterprises was 20 per cent, 19 per cent for agricultural sector and 17 per cent for exporters and importers.